This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Capital Structure And Product Market Rivalry: How Do We Reconcile Theory And Evidence?

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Dan Kovenock
Gordon M Phillips

Additional information is available for the following registered author(s):

Abstract

This paper presents empirical evidence on the interaction of capital structure decisions and product market behavior. We examine when firms recapitalize and increase the proportion of debt in their capital structure. The evidence in this paper shows that firms with low productivity plants in highly concentrated industries are more likely to recapitalize and increase debt financing. This finding suggests that debt plays a role in highly concentrated industries where agency costs are not significantly reduced by product market competition. Following the empirical evidence we introduce the "strategic investment" effects of debt and argue that this effect, in conjunction with agency costs, appears to fit the data.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.ces.census.gov/index.php/ces/cespapers?down_key=100239
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 95-3.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Feb 1995
Date of revision:
Handle: RePEc:cen:wpaper:95-3

Contact details of provider:
Web page: http://www.ces.census.gov

For technical questions regarding this item, or to correct its listing, contact: (Cheryl Grim).

Related research
Keywords: CES; economic; research; micro; data; microdata; chief; economist;

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bolton, Patrick & Scharfstein, David S, 1990. "A Theory of Predation Based on Agency Problems in Financial Contracting," American Economic Review, American Economic Association, vol. 80(1), pages 93-106, March. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Neelam Jain & Thomas D. Jeitschko & Leonard J. Mirman, 2001. "Financial Intermediation and Entry Deterrence," Tinbergen Institute Discussion Papers 01-037/2, Tinbergen Institute. [Downloadable!]
    Other versions:
  2. Douglas W Dwyer, 1995. "Whittling Away At Productivity Dispersion," Working Papers 95-5, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  3. Baggs, Jennifer & Brander, James A., 2005. "Trade Liberalization, Profitability, and Financial Leverage," Analytical Studies Branch Research Paper Series 2005256e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  4. Neelam Jain & Thomas Jeitschko & Leonard J. Mirman, 2001. "Financial Intermediation and Entry-Deterrence: A survey," Economics Bulletin, Economics Bulletin, vol. 12, pages 1-13. [Downloadable!]
  5. Javier Campos, 2000. "Responsabilidad limitada, estructura financiera y comportamiento de las empresas españolas," Investigaciones Economicas, Fundación SEPI, vol. 24(3), pages 585-610, September. [Downloadable!]
  6. Dick Damania, 1997. "Debt as a collusive device in an oligopoly supergame," Journal of Economics, Springer, vol. 66(3), pages 249-269, October. [Downloadable!] (restricted)
  7. Stefan Beiner & Markus Schmid & Gabrielle Wanzenried, 2004. "Product Market Competition, Managerial Inventives, and Firm Valuation," Diskussionsschriften dp0412, Universitaet Bern, Departement Volkswirtschaft. [Downloadable!]
  8. Baggs, Jennifer & Brander, James A., 2005. "Libéralisation des échanges, rentabilité et levier financier," Direction des études analytiques : documents de recherche 2005256f, Statistics Canada, Direction des études analytiques. [Downloadable!]
  9. Julie Hunsaker, 1999. "The role of debt and bankruptcy statutes in facilitating tacit collusion," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 20(1), pages 9-24.
  10. Nicola Cetorelli & Philip Strahan, 2004. "Finance as a barrier to entry: bank competition and industry structure in local U.S. markets," Working Paper Series WP-04-04, Federal Reserve Bank of Chicago. [Downloadable!]
    Other versions:
  11. Ernesto Schargrodsky, 2002. "The Effect of Product Market Competition on Capital Structure: Empirical Evidence from the Newspaper Industry," Business School Working Papers veintiocho, Universidad Torcuato Di Tella. [Downloadable!]
  12. Nicola Cetorelli, 2004. "Real effects of bank competition," Working Paper Series WP-04-03, Federal Reserve Bank of Chicago. [Downloadable!]
    Other versions:
Statistics
Access and download statistics

Did you know? You too can volunteer for RePEc, for example by providing information about publications in your institution.

This page was last updated on 2009-11-13.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.